PUMP action among commercial property investors has fuelled the rise of Queensland’s service stations as one of the most sought-after asset classes.
The increased demand has come amid the changing face of the traditional Australian service station model into a more “heightened” retail experience.
In one of the latest deals, a Sunshine Coast service station has been snapped up for $8.6 million by a NSW-based private investor on an initial yield of 5.93 per cent.
The United Petroleum service station on a 1932sq m corner site at 1816-1818 David Low Way, Coolum Beach, comprises a Quick Stop convenience stop, large canopy area and six bowsers with 48 pumps capable of servicing 12 vehicles at a time.
JLL’s Campbell Bowers, who negotiated the deal with colleague Doug Rapson, said the asset’s 20-year lease with options to 2056 and fixed annual rental increases was a compelling investment opportunity.
“The asset presented passive investors with a secure and long-term income growth opportunity and potential for long-term development upside in a sought-after residential, commercial and development suburb,” he said.
The property also features an automatic car wash and is strategically positioned along David Low Way – the main route linking Maroochydore to Noosa Heads.
“With finance at record lows paired with the onus of contamination risk and remediation costs falling on the tenant, investors have moved to seek out fuel investments with strong lease covenants that are underpinned by strong land value,” Mr Bowers said.
The Coolum deal comes off the back of the sale of a United Petroleum service station at Labrador on the Gold Coast in April, which sold for $8.975 million.
Mr Rapson said the increased interest from private investors in fuel assets coincided with a changing dynamic in the traditional Australian service station model.
“No longer are service stations single product stops,” he said. “Fuel is being joined by family meal offerings, pop-up grocery stores and a heightened retail experience.”
But Mr Rapson said more change was to come with Woolworths entering into binding agreements to facilitate the sale of 527 service stations and 16 development sites to BP.
“It’s a sector-changing strategic alliance for Australia, with both sides bringing their considerable reach to the table,” he said.
“An important component of the sale is the development of a world-class convenience food offer – Metro at BP.
“This side of the business would offer ready-to-eat and take-home meals, similar to its partnerships with Marks & Spencer in the United Kingdom and REWE in Germany, and will draw on Woolworths’ scale and capabilities to compete with other convenience-based centres.
“If the deal is approved, Metro at BP will have an impact on the viability of traditional small retail convenience stores including IGA, NightOwl and 7-Eleven.”
Extracted from Adelaide Now.